After a parabolic fortnight, which has felt like a decade, the week has started on a much calmer note. However, officials will continue to have an information advantage over market participants, which makes the fear of the unknown a concern.
And stocks are trying to find a new equilibrium as bank stresses ease, and US yields shift higher. We remain skeptical that banking stresses can continue to be priced as a US-only event and think this episode ends as a smaller rumble or spreads further abroad. Currently, markets( and ourselves) are leaning toward the smaller rumble.
Although it is well-known that regional banks "borrow short and lend long," their earnings have historically been remarkably resilient to monetary tightening because there was little competition for their deposits. So higher Fed funds rates didn't necessarily translate into higher deposit rates in the past. But in the age of digital banking, that has changed as in the click of a mouse, folks can take advantage of FDIC-insured deposit brokers and banks offering higher depo rates.
As oil markets recovered from an excessively pessimistic week, overnight prices exhibited the typical knee-jerk reaction higher to a short-term supply disruption and then classic profit-taking taking recoil in Asia.
After an exodus of investors' flows positioning, prices usually only recover gradually. Still, the China demand boom changes the " usual " landscape, so any disruption would illicit an outsized move.
But we think the chase mode kicked in because most traders, even physical traders, were relatively flat after last week's VAR shock.
Nevertheless, the bullish burden of proof ultimately remains on the market to pivot into a deficit, showing that marginal supply is needed.
SPI Asset Management provides forex, commodities, and global indices analysis, in a timely and accurate fashion on major economic trends, technical analysis, and worldwide events that impact different asset classes and investors.
Our publications are for general information purposes only. It is not investment advice or a solicitation to buy or sell securities.
Opinions are the authors — not necessarily SPI Asset Management its officers or directors. Leveraged trading is high risk and not suitable for all. Losses can exceed investments.
Recommended Content
Editors’ Picks
EUR/USD steady below 1.0800 after US PCE meets expectations
EUR/USD remains depressed below 1.0800 after soft French inflation data, amid minimal volatility and thin liquidity on Good Friday. The pair barely reacted to US PCE inflation data, with the Greenback shedding some pips. Fed Chair Jerome Powell set to speak ahead of the weekly close.
GBP/USD hovers around 1.2620 in dull trading
GBP/USD trades sideways above 1.2600 amid a widespread holiday restraining action across financial markets. Investors took a long weekend ahead of critical United States employment data next week. Fed Chair Powell coming up next.
Gold price sits at all-time highs above $2,230
Gold price holds near a fresh all-time high at $2,236 in thinned trading amid the Easter Holiday. Most major world markets remain closed, although the United States published core PCE inflation, the Federal Reserve’s favorite inflation gauge.
Jito price could hit $6 as JTO coils up inside this bullish pattern
Jito (JTO) price has been on an uptrend since forming a local bottom in early January. Since then, JTO has revisited the key swing point formed in early December, suggesting the bulls’ intention to move higher.
Key events in developed markets next week
Next week, the main focus will be inflation and the labour market in the Eurozone. We expect services inflation to be impacted by the easter effect, while the unemployment rate to be unchanged.